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Who is right – the bond or the stock market?
Since six months the correlation between 10yr Treasury bond yields (purple, left hand scale) and the US stock market (right hand scale) had been perfectly positive. Fears about European defaults and thereby lower world growth led to falling stock prices, which led to rising bond prices (or falling yields). Less growth = less inflation = good…
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GLD now the world’s second largest ETF
GLD is now the world’s second largest ETF (exchange traded fund) with 1,308 tonnes of gold worth $51bn (SPY is the biggest one with $83bn). Governments finally realize that too much debt leads to default. Now they try to tighten the fiscal belt. All that it left to avoid financial disaster is “quantitative easing” (=…
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Is corporate debt safer than government debt?
Another day in the bond market, another day of sovereign spread widening. 10yr Greeks now (June 16) yield 9.34% (+0.26), Spanish 4.88% (+0.14), compared to German 2.66% (unch.). On Thursday, Spain will try to sell EUR 3.5bn in new 10yr and 30yr bonds. Good luck. We won’t even know if the auction failed or not…
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Greek 10yr bond yield above 9% after downgrade – Spain next?
When a picture speaks louder than words: the Greek 10yr bond yield. After Moody’s downgraded Greece to “junk” it fell out of certain government bond indices and hence forced selling was expected. Despite best efforts by the ECB to manipulate Greek bond prices upwards they fell, causing the yield rising to 9.08% (+0.76). Meanwhile, top…
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Greece: A Ratings History
Everything seemed fine until end 2009. Few people talked about it. The debt was there. The deficits known. But Greece was still able to issue more debt. Until January 2010. S&P woke up first (BBB- is the lowest investment-grade rating; below means “junk”): Source: FT MoneySupply Blog Luckily the country is run by trustworthy politicians who…
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Short term US T-bills almost back to zero
Look at 1-month yield for US Treasury bills: almost back to zero. Risk is out – everyone wants to be in a (presumably) safe place (even if there is basically no interest). $1,000,000 invested at 0.02% for one months yields less than $20. Pays for the cab ride home. With Libor steady at above 0.5%…
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Belgium CDS rise after election – Moody’s downgrades Greece to “junk”
Decent move in Belgian CDS (credit default swaps) today (+16% to 130bps) after Flemish separatists emerged as strongest party in Sunday’s elections. After elections in 2007 it took nine months to form an unstable five-party coalition (leading to three governments in as many years). Fears are the highly indebted country might break up leaving the French…
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Another red flag: Commercial Paper (CP)
What are CP’s? They are unsecured “promissory notes”, sold by large companies and banks with excellent credit ratings to finance short-term needs. They mature within 1 to 270 days (35 on average). Unsecured means there is no collateral (except asset-backed CPs). If the issuer goes belly-up while you hold a CD the joke’s on you.…
Month: June 2010
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